New guidance to cut costs for PFI projects

Government agency 4ps has released new guidance aimed at helping local authorities to better manage operational PFI contracts.

The 4ps Accommodation Change Protocol is based around existing guidelines and has been drawn up taking into account criticisms about the change process raised by a controversial National Audit Office report earlier this year. Rob Hann, 4ps’ legal director, said: "The change protocol has been approved as SOPC4 compliant by Partnerships UK. The documentation is aimed at helping local authorities to achieve efficiency from long term contracts and facilitate the ability to make changes during a contract."

Hann says that though the change protocol is focused on accommodation projects it can be adapted to individual sectors. He added that a street lighting specific change protocol would be launched within the next two weeks.

The guidance advises local authorities to catalogue changes into small, medium and high value categories and cost them accordingly. This is expected to add certainty to costing of change and enable several changes to be paid for under one unitary charge. Clare Robinson, legal director at Addleshaw Goddard who worked with 4ps in developing the new guidance, says sponsors should propose a change management service as part of their initial bids.

She said public sector authorities should, "test each bidders’ proposed change service during competition and develop a standard template to test catalogue prices and labour rates at the dialogue stage."

But industry sources have complained that categorises changes into cost brackets of low, medium and high value is just too vague. One funder said: "The idea that charges can go ahead just because of its size is horrendous." He added that in the today’s current conditions that a catalogue service would make it even more difficult to get approval for spending on changes.

However Hann says that the changes "have to be categorised somehow and this seems to be the most easily understandable way to do it."